Pull out your wallet and count how many loyalty cards or vouchers are in it. 4? 6? 8?
That wouldn’t surprise me; more than half of us are a member of 2-4 loyalty schemes, while a quarter will own up to 9 loyalty cards.
There’s a certain irony to possessing so many cards that supposedly indicate our loyalty to one retailer, but that’s the truth of modern loyalty. Shoppers are fickle, and the incentives they’re offered often aren’t enough to ensure true advocacy. I’m sure I’m not the only person who frequently forgets to swipe my points card at the checkout.
Saying the traditional loyalty model is broken is all well and good, but it’s how we fix it that matters. We have to understand what matters to today’s shoppers, and use that knowledge to develop programs that resonate with their needs.
In order to do this, iVend Retail recently commissioned some research into customer loyalty. These insights have enabled us to create a 4-step roadmap to increasing lifetime customer value, which I would like to share with you:
Step 1 – know the customer’s total value
The biggest problem with the evolution of omnichannel trading is that, although shoppers interact across multiple channels, retailers can’t always recognize their activity as a cohesive picture of each customer. This means that shoppers are often treated differently online and offline, or are forced to collect loyalty points separately in each channel.
Putting the technology in place to track customer loyalty in-store is fundamental to nurturing customer relationships. It will also increase shopper satisfaction, as they can then begin to redeem points accrued online in-store, and vice versa.
Step 2 – use customer knowledge to personalize offers
Many retailers use shopper data to tailor ecommerce offers already, but this level of customization is yet to reach stores in a widespread manner. According to our research, a third of consumers believe the bricks-and-mortar promotions aren’t sufficiently targeted, compared to the incentives they receive online.
With the technology in place to gain a single view of the customer across all channels, retailers can use the data generated to enhance loyalty offerings in the store environment. For example, flash offers on a product that shoppers purchase frequently, or a VIP discount for high value customers.
Step 3 – make loyalty more than a ‘money off’ incentive
Today’s shoppers want a greater degree of sophistication than basic money off deals. At NRF’s Big Show earlier this year, WPP’s David Roth discussed how loyalty today means improving 3 key areas of consumers’ lives: money, health and time. The most valuable rewards are often those that add convenience or boost the mood.
It’s also worth noting here that shoppers want to be incentivized on more than just how much they spend. If the aim is to build advocacy, then retailers should look for multiple means of engagement – rewarding a customer for posting about them positively on social media, for example.
Step 4 – reinvigorate what the scheme actually looks like
Loyalty’s current struggle is as much about the physical manifestation of schemes as their offering. By this, I mean that most bricks-and-mortar businesses still print vouchers or cards, which often go unclaimed. Our study revealed that almost half of shoppers fail to use paper vouchers before they expire, while a further 15% forget to use the loyalty cards they carry in their wallets.
To build a program that rewards consumer interactions across all channels, retailers need to embrace the one device that is common to all retail activity: mobile. Smartphones are becoming an increasingly important part of the store journey in addition to online, and therefore embracing a digital passbook such as Apple Wallet can make an omnichannel loyalty scheme more cohesive.
This also makes it much easier to track omnichannel activity, which feeds back into our first step of knowing – and rewarding – the customer’s total value.
Discover more about nurturing customer value by visiting iVend Retail’s Loyalty Bar at Retail Business Technology Expo 2016, London, on 9th-10th March. Download a digital pass to receive a complimentary drink.